Mumbai: Real estate sector in split about industry's future sentiment; Q4 figures likely to shrink
Publish on : 2022-10-29 11:49:21
The latest edition of Knight Frank-NAREDCO Real Estate Sentiment Index Q3 2022 (July-September 2022) report cited that the current sentiment score has declined marginally from Q2.
Mumbai: While developers and a section of the real estate trade association are bullish about the housing market, the latest industry report has raised concerns about the housing sector's future sentiment as it anticipates residential sales and launches to shrink further in the fourth quarter (Q4) of 2022.
The latest edition of Knight Frank-NAREDCO Real Estate Sentiment Index Q3 2022 (July-September 2022) report cited that the current sentiment score has declined marginally from Q2 on account of the economic scenario playing out globally. The index measures stakeholder perceptions for the real estate sector.
Risks involved amid the Russia-Ukraine war
Knight Frank is a global property consultant whereas NAREDCO is real estate's national-level trade and autonomous self-regulatory body.
The current sentiment index score has scaled down, primarily because of the dark global economy and the current geopolitical risk due to the Russia-Ukraine war. Although it has declined marginally, it still shows optimism since perception of the Indian economy and real estate remains resilient thus far.
The impact of the global economic headwinds on the Indian economy is yet to play out. Additionally, housing affordability has shrunk further, after the repo rate hike in September 2022.
According to the report made public on Thursday, the volume of residential sales and launches which have declined sequentially from Q2 2022 to Q3 2022, is likely to shrink further in Q4.
Anarock Group: Homeownership sentiment retained despite interest rate hikes
Meanwhile, the Anarock Property Consultant is bullish. Anuj Puri, chairman of Anarock Group, is of the view that 2022 would create residential market history in India as it has already breached all previous highs and continues to witness strong sales momentum in the ongoing festive season. According to him, the homeownership sentiment retained the vibrancy ushered in by the pandemic era, despite interest rate hikes of 190 basis points and increased property rates, among others.
Mr Puri also said claims of a lack of festive season offers and discounts this year are contrary to the ground reality. In the recently concluded CREDAI-MCHI exhibition, developers were offering various freebies to boost sales, indicating an anticipated slowdown in the housing sector.
“Although the developers remain optimistic about the following six months, they are concerned about demand translating into new house purchases...,” mentions the sentiment index report, contradictory to Mr Puri's opinion.
On the sentiments, another industry expert Pankaj Kapoor, founder and managing director of Liases Foras – a real estate research and rating company – shared that the purchasing power for residential units will be impacted due to inflationary pressures with property prices likely to increase by 6-7% in the upcoming quarters.